What Is A Written Verification of Employment (WVOE) Form? Can it Help Us Get the Mortgage To Buy The Home That We Currently Need? Can It Speed Up the Home Buying Process?

Applying for a mortgage can be overwhelming with all the requests, forms, and procedures. Add in some terms like WVOE — Written Verification of Employment — and it could be even more confusing. We decided to clear a bit of this information up for you. You don’t always need a WVOE to get a home loan. WVOE is another term for Fannie Mae’s Form 1005, a standard form that has been given out for years to verify employment status and income when qualifying borrowers for mortgages.

Do I have to get my employer to complete a WVOE to get a home mortgage?

Not always. You’ve got several alternatives to a WVOE. First, if your employer participates in a few of the industry-wide e-verification programs for income and employment, they will likely have their HR database linked to one of these programs which allow Mortgage Brokers and Lenders to directly verify your income and employment with your signed consent.

Second, you could get your employment and income verified on the same day online. This is part of Fannie Mae’s Day 1 Certainty program. The Day 1 Certainty program is intended to speed up the mortgage approval and finance process. It offers freedom from paper-based traditional processes, including WVOE (Written Verification of Employment). Your Independent Mortgage Broker can guide you through this process.

What are my alternatives to verify my income and qualify for a mortgage?

You have more alternatives today than ever before to qualify for a mortgage. Understanding your choices is one of the best reasons to work with a qualified, experienced Independent Mortgage Broker, who is a mortgage professional. They can use new tools to get your income verified and qualify you for a mortgage quickly.

A qualified independent mortgage broker can get your income and assets verified on the same day, all online. This means no more copying the last 2 months of pay stubs or trying to use your phone to take a picture of paper documents. You won’t have to take forms to your employer, and won’t have to spend a fortune copying tax returns or bank statements.

If you’ve heard that you need to fill out a WVOE if you get bonuses, earn tips, or have commission income, this is one great reason to work with an independent mortgage broker. While some lenders may still require this document and written verification, an independent mortgage broker who’s up to speed on paper-free documents and verifications can help you with Day 1 Certainty and other ways to cut down on paperwork that’s often redundant to help you get the mortgage you need to buy the home you want.

Sources

https://www.fanniemae.com/singlefamily/day-1-certainty

 

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Is There A Current Program That Will Quickly Enable Us To Buy a Bigger, Better Home? Is an Adjustable Rate Mortgage a Smart And A Safe Solution At This Moment?

Mortgage interest rates have been declining for a while now, so you may not even think about an adjustable-rate mortgage (ARM). There are a few reasons an ARM might make good sense for you financially even with today’s low 30-year fixed mortgage interest rates. ARM interest rates can be up to half a percentage point (or more) lower than a fixed-rate mortgage, especially when it comes to Jumbo ARMs and Super Jumbo ARMs. In high housing cost markets like Los Angeles and Orange County, along with many other high-cost counties in the State of California, a half-point difference in mortgage interest rate could help you to buy a bigger, better house.

What are the advantages of an Adjustable Rate Mortgage (ARM)?

As long as ARMs offer lower interest rates than fixed-rate 30-year mortgages, you may be able to qualify for a larger loan and therefore, a bigger, better house.

For example, if you wanted to buy a $1 million home, put 20% down, and apply for a 5/1 ARM at 3.35% interest, your monthly payments (excluding taxes and insurance) would be about $3,540. At 3.99% interest and a fixed-rate 30-year mortgage, your monthly principal and interest payments would be more than $3,800.

If there is no difference in interest rate between a 30-year fixed-rate mortgage and a 5/1 ARM, then the ARM won’t help you to qualify for a higher loan amount and a bigger house.

What are some pitfalls of an ARM?

ARMs come with different terms. Common ARM terms are 3/1, 5/1, 7/1, and even 10/1. The first number indicates the number of years you’ll have your initial interest rate locked in. So, a 5/1 ARM will have the same interest rate and monthly payment for five years. The second number indicates how often the rate can change after the initial rate period. You’ll notice all the common ARMs can have their interest rate change every year after the initial fixed-rate term. By “change”, you’re right — the biggest pitfall with an ARM is the potential for the interest rate, and monthly payment, to go up every year after the initial fixed-rate term.  Watch our short video clip below that explains the 3 Reasons why you should consider an Adjustable Rate Mortgage.

If you’re interested in an ARM so you can buy the home you want, and save on the compounding effect of interest, you should work with an experienced mortgage professional to locate an ARM that has terms you can understand and live with. ARMs can have caps on the amount their interest rate can go up when the fixed-rate term ends. They can also have a cap on the total interest rate increase over the lifetime of the loan.

Sources

https://www.realtor.com/advice/finance/i-got-an-adjustable-rate-mortgage/

https://www.nerdwallet.com/blog/mortgages/pros-cons-adjustable-rate-mortgages/

https://www.cnbc.com/2019/08/23/why-you-might-want-to-rethink-getting-an-adjustable-rate-mortgage.html

https://www.mortgagecalculator.org/calcs/5-1-arm.php

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Jumbo Mortgages Demystified: The Top 10 Must-Knows

 

Deciphering the Jumbo Lexicon

For the uninitiated, a jumbo mortgage stands apart for its size, typically exceeding standard loan limits. But the exact threshold varies. In many U.S. counties, it’s any mortgage over $484,350. However, in high-end markets like LA and Orange counties, the jumbo cut-off rises to over $726,525, with ‘super jumbo mortgages’ soaring even higher, sometimes into the $10M to $20M range.

10 Vital Insights into Jumbo Mortgage

  1. Nonconforming Nature: Jumbo loans are termed nonconforming because they surpass the loan limits set for entities like Fannie Mae and Freddie Mac.
  2. Conventional Yet Nonconforming: Despite being nonconforming, jumbo loans are still conventional mortgages, which means they aren’t government-insured.
  3. Versatile Interest Rates: Interest rates on these loans can be either fixed or come with an adjustable APR.
  4. Sturdy Credit is Crucial: The credit score prerequisites for jumbo loans are stringent, often demanding scores of 700-720 or even higher.
  5. Low DTI Ratio: Ideally, your debt-to-income (DTI) ratio should be below 45%. While there are options with higher DTIs, they come with a higher interest rate.
  6. Cash Reserves: Lenders often expect proof of sufficient cash reserves covering up to a year’s mortgage payments.
  7. Paperwork Galore: The documentation for jumbo mortgages is comprehensive, encompassing tax returns, bank statements, investment accounts, and sometimes more.
  8. Double Appraisals: Given the risk they represent, lenders might seek two appraisals to ascertain the property’s value.
  9. Hefty Down Payments: A significant down payment, ranging from the values of 10% to 20% of the purchase price, is a given with jumbo loans.
  10. Competitive Interest Rates: Interestingly, in markets like California, jumbo mortgage rates can be as competitive as, or even lower than, those for standard loans.

Beyond Borders: Jumbo Loans for Non-US Citizens

A noteworthy mention is that these oversized loans aren’t exclusive to U.S. citizens. Permanent residents and even foreign nationals can venture into the jumbo or super jumbo mortgage realm, opening doors to opulent properties and luxury dwellings.

Jumbo mortgages might seem daunting with their voluminous nature and intricate requirements. However, they pave the way to prestigious properties and upscale residences. So, if a luxurious home in LA, Orange County, or any premium locale is on your horizon, arm yourself with this knowledge, collaborate with a jumbo mortgage expert, and make that dream a reality.

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